Full Judgment
2. On a careful examination of the records, I am of the view that the appeal itself requires to be finally disposed of at this stage.
Therefore, I allow the present application and proceed to deal with the appeal.
3. Heard both sides. The Consultant for the appellants submits that the order of the Commissioner (Appeals) is violative of the principles of natural justice inasmuch as no opportunity was granted to the assessee for explaining the delay, if any, involved in the filing of the appeal before that authority. He submits that the assessee's contentions on the merits of the case were also not examined by the lower appellate authority. It had been submitted by the assessee before the Commissioner (Appeals) that the classification dispute in respect of the final product was pending and, therefore, it was -premature to pass an order on the Modvat issue. The Consultant submits that the assessee has registration with the department only for the manufacture of round boxes etc. classifiable under Chapter 48 and that they have no registration/licence for the manufacture of any goods classifiable under Chapter 44. In their classification declaration filed with the department under Rule 173B, the assessee claimed classification of their products under CSH 4819.19. However, the jurisdictional Deputy Commissioner of Central Excise approved classification under CSH 4410.90 only. The order of the Deputy Commissioner was taken in appeal to the Commissioner (Appeals) and that appeal is still pending. If the appellants' claim as to classification is accepted, the final product will be chargeable to duty @ 16%, in which event they will be entitled to take Modvat credit on their inputs used in the manufacture of such final product. If, on the other hand, the classification is held under CSH 4410.90 as claimed by the department, then the appellants will not be entitled to take such credit on the inputs by virtue of the provisions of Rule 57C(1). Therefore, the Consultant submits, the decision on the classification dispute at the first appellate stage would determine the appellants' right to take Modvat credit on the inputs. The lower appellate authority ought not to have passed the impugned order without first having decided on the classification issue.
4. Ld. JDR has reiterated the findings of the Commissioner (Appeals).
The Commissioner (Appeals) had, by letter dated 11-7-2001, given an effective opportunity to the party to explain the delay, if any, involved in the filing of appeal. That opportunity was not properly made use of by the party. There was no violation of the principles of natural justice at the first appellate stage. On the merits of the case, the DR has not put forward any specific case.
5. Examined the submissions. The Commissioner (Appeals) has rejected the assessee's appeal on the sole ground of time-bar. That appeal was against the order-in-original passed by the Assistant Commissioner on 31-10-2000. The appeal was filed with the Commissioner (Appeals) on 19-2-2001. In that appeal, the appellants stated that they had received the order of the Assistant Commissioner on 30-12-2000. The appellate authority, however, found out, by way of enquiries, that the order of the Assistant Commissioner had been received by the party on 12-11-2000. Therefore, a letter dated 11-7-2001 was issued from the office of the appellate authority directing the appellants to show cause why the appeal should not be dismissed as time-barred. In answer to that notice, the party submitted, in their letter dated 24-7-2001, that they had received the Assistant Commissioner's order only on 30-12-2000 and that the appeal was within the period of three months from the said date. The Commissioner (Appeals) did not accept this submission for want of evidence and rejected the appeal as time-barred.
Today, it has been submitted by the Consultant that the order of the Assistant Commissioner had been received by an employee of the appellants on 12-11-2000 but it was only on 30-12-2000 that he delivered the order to the appellants. I find that this explanation was not offered by the appellants in their letter dated 24-7-2001 to the Commissioner (Appeals). Nevertheless, it appears from the record that, on 28-1-2002 i.e. after the impugned order was passed by the Commissioner (Appeals), the appellants submitted an application to the appellate authority for condonation of the delay of the appeal. In that application, they offered the explanation which has been put forward today by the Consultant. The appellants have been working under the Central Excise law since 1995 and, by now, they must have been well-versed with the provisions of Central Excise and can no longer plead ignorance of the provisions. Having accepted that their employee had received the order of the Assistant Commissioner as early as on 12-11-2000, they ought to have filed a delay condonation application along with their appeal before the Commissioner (Appeals), That was not done. Atleast in answer to the notice dated 11-7-2001 issued from the office of the Commissioner (Appeals), they could have availed of the opportunity and applied for condonation of the delay. That was also not done. Receipt of the order by the appellants' employee was receipt by the appellants themselves in the eye of law. Therefore, before the Commissioner (Appeals), the appellants virtually conceded that the Assistant Commissioner's order was received on 12-11-2000. With reference to that date, their appeal was clearly time-barred.
Therefore, rejection of the appeal on the ground of time-bar cannot be faulted. Nevertheless, the Commissioner (Appeals) ought to have heeded the appellants' plea that it was premature to decide the Modvat case without first settling the classification issue relating to the final product. A final decision on the classification of the final product in respect of which the Modvat credit was availed and utilized will have a direct bearing on the issue whether the appellants were entitled to take the input credit in question. The lower appellate authority ought to have refrained from disposing of the appeal summarily, pending the as-sessee's appeal against the Deputy Commissioner's order on the classification issue.
6. In view of the above findings, I set aside the order of the Commissioner (Appeals) and allow the present appeal by way of remand, directing the lower appellate authority to decide on the assessee's classification appeal first in accordance with law and the principles of natural justice and, thereafter, subject to such decision, dispose of their Modvat appeal in accordance with law and the principles of natural justice. In respect of the latter appeal, it is further directed that a reasonable opportunity shall be given to the appellants to explain the delay involved in the filing, of that appeal.